Coalition affirms commitment to RET as is

Climate Spectator caught up with Greg Hunt, the Coalition's spokesperson for climate change this week to ask a series of questions around its policies for support of renewables, energy efficiency and carbon capture and storage.

The interview was not intended to touch on its broader Direct Action Emissions Reduction Fund, although he made some interesting comments on how it will employ a reverse auction mechanism rather than grant tendering.

The gigawatt-hour level of the RET target

First off the rank was whether the Coalition maintained its commitment to the Renewable Energy Target and in particular, the current legislated gigawatt-hour targets.  Hunt made it clear that the Coalition's position would be informed by findings from the Climate Change Authority's review of the scheme and so were not locked in stone. However he said, “We are committed to the 20 per cent RET and have no plans to change the current arrangements.” 

When further questioned about whether a 20 per cent RET might be one defined differently to that currently embodied within the legislation, he replied that, “we genuinely have no plans to change any definitions.”

Support for emerging renewable energy technologies

Nonetheless the Coalition remains keen to reserve 6,000 GWh of the large-scale RET for emerging technologies as embodied in the party's 2010 election platform.  The election platform mentions geothermal, solar fields (which I presume to mean mirror-based concentrating solar such as solar thermal), wave and tidal projects above 10MW in capacity.  According to Hunt, reserving a proportion of the target for such technologies is preferable to certificate multipliers, as applied to solar PV, which he felt had “caused much damage.”

Yet at this stage Hunt was unwilling to go into further detail about how this special emerging technologies band would operate, such as qualification criteria and timing around phasing in such a target band. Climate Spectator in particular pressed him on the need for a higher certificate shortfall penalty for this band to be effective, but he said these things would be worked out in consultation with industry.

In terms of the Coalition's commitment to retaining the current levels of funding for ARENA, Hunt was more equivocal, stating:

“Given that the government has changed its allocations to ARENA at every budget and there is still a budget which may occur before the election, we will consider allocations in terms of the prevailing funding at that time.”

We also asked his views on how we might be able to improve the way we allocate money to emerging technologies given the problems with grant-tendering programs in the past. Hunt took this as an opportunity to point out the failures with the government's insulation, green loans, cash for clunkers and contracts for closure program, but didn't offer any views on how it might be done better.

Direct Action Emissions Reduction Fund

Hunt also pointed out, in relation to our question about problems with past grant tendering programs, that the Coalition's Direct Action Emissions Reduction Fund would operate as:

“A pure reverse auction. We will buy the lowest cost per tonne of CO2 whether it comes from waste coal mine gas or landfill gas clean up, from land sector abatement, energy efficiency or the clean-up rather than closure of power stations.” 

This is quite interesting, because it appears to represent somewhat of a change from the Coalition's 2010 election platform.

In the 2010 Direct Action Plan it says they would call for tenders, and reverse auctions aren't mentioned. In addition the strict focus on cost per tonne of CO2, irrespective of source, represents a more straightforward approach than outlined in the 2010 plan which stated:

“To ensure the Fund supports a broad range of direct action initiatives, measures considered for support by the Fund will be assessed against similar proposals from similar sectors. Assessment of projects will also take into account any additional significant public policy benefits.”

Unfortunately we didn't have the opportunity to discuss this change in approach further, as well as clarify precisely how “clean up rather than closure of power stations” would work in practice. However if the Coalition intends to take a more simplified approach, this is likely to be welcome news for those engaged in abatement projects.

Solar and small-scale renewables

In terms of solar and small-scale renewables we asked whether the Coalition had any intention of replacing the small scale renewable energy target with a rebate, or merging it with the LRET into a single scheme. Again Hunt repeated there were no plans to change this element of the scheme, but in good faith would await the findings from the RET Review. He said the same about any changes to the $40 clearing house price which drives the level of the SRES target.

The Coalition also remains committed to its Million Solar Roofs policy for solar PV and solar hot water. The policy is still for this to provide a $1000 rebate per system for 100,000 households per annum for ten years. 

Hunt informed us that system owners could receive the rebate, as well as small-scale renewable energy certificates, however low income households would be prioritised for the rebate.

Energy efficiency and demand management

In terms of energy efficiency policy, Hunt said the Coalition did not intend to implement a tradeable certificate scheme similar to the ones operating in Victoria and NSW.

However he did note the Coalition has argued strongly for a demand-side reduction capacity within the National Electricity Market. According to Hunt, “This has the potential to both reduce peak electricity demand through striking of voluntary power down agreements with large commercial and industrial users and in turn to reduce network build requirements.”

Carbon capture and storage

The interview concluded on carbon capture and storage. In recent times shadow energy minister Ian Macfarlane has been quite pessimistic about its prospects, but Hunt was more open.

“CCS technology development in the power station context has not yet matured and the cost projections remain very high,” he said.

“However construction of Chevron's Gorgon Project in WA which will separate and sequester CO2 from gas is well advanced. Any new coal-fired power station which might be contemplated for Australia should be designed to be ‘CCS Ready'. One of the most viable technologies may prove to be carbon capture and use for algal energy.”

While Hunt has not closed his mind to the potential for CCS to play an important role, he wasn't prepared to say whether the Coalition would increase or decrease the current government's level of CCS funding. According to Hunt, specific announcements will be forthcoming in the lead up to the next election.